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Is a contractor legally required to have a construction account for each project?

Anonymous Contractor

Investigating a case in which a contractor has one construction account and is co-mingling funds from three different projects in the account. From what I have read during my research, it is only "advisable" to have separate accounts for each project, not a "must have" or "legally have" an account for each project.

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Ben House

Construction Lawyer

Legal Guard Lawyer

Attorney at House Perron & House Pllc

| 52 reviews

May 1, 2020

While there exists law on the books known as the Texas Construction Trust Fund Act (Tex. Prop. Code Sec. 162) which might tend to make you think separate accounts are a requirement of Texas contractors, unlike a traditional trustee, a separate project-specific account is not a requirement of that law, or any other Texas law that I am aware of. That does not mean that utilizing an owner's funds for another owner's project is legal. There is commonly litigation based upon that very issue. I won't go so far as to say it is a common practice in construction, but in my experience it is not rare.

NOTICE: The advice provided above is of a general nature only and should not be relied upon under specific circumstances without first retaining an attorney
and having your legal issues reviewed in detail. Ben House and the law firm of House Perron & House PLLC are not agents, contractors, or employSee More...See More...

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